Costco in International Venture

At the present time, Costco operates 572 warehouses, and the bulk of these warehouses are in the United States and Puerto Rico, with 416 warehouses in these two countries combined.&nbsp. It operates in 40 U.S. states. Other countries in which it operates in Canada, with 79 warehouses. the United Kingdom, with 22 locations. Taiwan, with 6 locations. Korea, with 7 locations. Japan, with 9 locations. Australia, with 1 location. and Mexico, with 32 locations in 18 Mexican states (Investor Relations).

The annual revenues of Costco are $71.4 billion, with over 57 million cardholders, representing 31.3 million households. Costco employs over 100,000 people in the United States alone, and around 150,000 worldwide (Investor Relations).

At the moment, Costco is concentrated in North America, with just a few stores in Europe and fewer stores in Asia. There is, therefore, a great need to diversify the presence of Costco worldwide, and there is a great opportunity to do so. There are many promising markets that may be explored for market entry. Each country will have rewards, but will also present challenges and pitfalls that must be examined before entering that market. For the purposes of this strategic report, two markets will be examined, one in Asia and one in Europe. The European market that will be examined will be Russia. the Asian market will be Saudi Arabia. However, before these two countries will be profiled, an analysis of the general issues that face companies entering foreign markets, any foreign markets, will be explicated, and solutions will be offered.

There are three possible entry methods – acquiring a foreign firm or setting up a joint venture (JV) abroad with a foreign partner JVs require that Costco is partially integrated. acquiring a foreign firm requires full integration (Ackerman, 2007, p. 2). Alternatively, Costco can choose a greenfield plan, in which staff is recruited and chained individually, and the institutional arrangement can resemble that of the parent company (Estrin et al., 2007, p. 8). Cultural distance explained below, has an impact on the entry mode.